Full Transcript
Happy Friday! Brian Manning with the weekly update. Let’s get right to it.
Monday this week, really markets were just still in turmoil digesting Jerome Powell’s speech on Friday. Certainly, he just sent the markets into a spin on Friday and Monday was just kind of a continuation of the spin from his comments. And definitely, they were very hawkish as far as how they’re going to try and keep inflation under control and the rate hikes coming into the future. So, that was a little messy in the financial markets on Monday of this week.
But Tuesday this week, we got Case Schiller and I was super excited to get this report. So, Case Shiller is kind of the gold standard of data on the housing market. This is for the month of June. This showed in the month of June that home appreciation was up 6/10th of a percent on a month-over-month basis, which is extremely strong. On a year-over-year basis, home appreciation was up 18%. So, we fully understand this is cooling.
Yes, if you look at the prior month, home appreciation on a year-over-year basis was up 19.9%, we fully expected this to calm down. We expect to continue seeing calming in the appreciation here. You know, the thing about in June is this is probably… people that were shopping for homes in the month of April and May, June was really the apex of interest rates. So, I am curious to see what happens with home appreciation as we look at the month of July.
But Case Shiller, when they put out this report, also put out a statement and part of their statement said, you know, you got to keep in mind that… deceleration and appreciation is extremely different than a decline in the market. And right now, we’re not seeing a decline at all. Certainly, seeing appreciation at 18% year-over-year is a ridiculous number and incredible reason to own a home. And again, we’re going to continue to see some softening in the market. 18% appreciation is not sustainable, that we have to calm down from there as well because you can’t even keep at those levels. So, we’re going to continue to see some softening. But, you know, for sure deceleration is very different than a decline in the marketplace. We’re not seeing negative values and we’re still seeing everything hold strong there, which is really great.
Wednesday this week, and I cannot believe it, it is jobs week already. The first week of every month, we get jobs data on the prior month. So, the first Wednesday of every month, we get the ADP data. ADP had taken three months off from given their jobs data because… they were doing a lot of modeling before, kind of like the DLS does, and they wanted to revamp it. And instead of modeling, they’re now taking very specific data from a sample pool of 25 million people. So, I would say it’s probably very accurate. This is for the month of July. ADP reports in the month of July that we had 132,000 jobs created, less than what was expected. But that was what ADP came out with.
Thursday, we had a quiet news day. And really, Thursday was quiet, just anticipation of the BLS report that we got today. And then today Friday, the first Friday of every month, we get the BLS report. So, this is for the Bureau of Labor Statistics. It’s the first Friday of every month. So, the report we got today is employment information for the month of July. And the BLS report came back that there were 315,000 new jobs created in the month of July. Now, the 315,000, there’s a lot of modeling that goes into that number. Part of what’s look at is what’s called the birth-death ratio.
So, for example, they look at how many companies were open in the month of July. Of those companies that were open, what’s the industry that they’re in, based on the industry that they’re in, on average, how many people would they hire? And then also, how many companies close in the month of July? Based on the industries that they’re in, if you close the company how many people would they lay off?
So, there’s a lot of modeling that goes into this. So, there are 315,000… I’m not really as much of a believer of how accurate it is. I’d say ADP is the most accurate because they got a 25-million-person sample pool, but the number is what it is. We also get the household survey. So, the household surveys when they call about 60,000 households across the US and they get feedback from them. And the household survey showed that there were 442,000 jobs created in the month of July. But what’s interesting about the household survey is that when you dig really deep into the household survey, that shows you that of the 442,000 jobs that were created in the month of July, 82% of those jobs that were created was for people that were higher between the ages of 16 and 19.
Now… It’s amazing. I love seeing young people go to work and young people should have jobs. But… The challenge that we have is that when you’re between the ages of 16 and 18, you’re not really contributing that much into the economy. You’re probably not a home buyer at that age. So, seeing a really robust jobs reports of 442,000, but realizing that 82% is at such a young age and young people going to work, doesn’t really show this really very strong jobs data there. So I’m curious to see what happens next month and when we get our jobs data for the month of September, because I think it’s going to give us some more feedback on what’s happening with the labor market. Everybody’s watching this. We’ve talked about this in the past. You know, labor market softening is really the turning point of what you consider going into a recession. We’re not seeing it just yet. Maybe we’ll see it for the month of September. I’m not sure. We’ll have to wait and see.
I know it’s a holiday weekend coming up. I hope everybody has an amazing Labor Day weekend. I’m around all weekend. If you have any questions, let me know. If you want to get pre-approved, give me a call on my cell phone, or text me. If you want to go through our strategic buyer consultation, give me a call. Happy Friday. Happy Labor Day weekend. Have a great day. I talk to you soon.
-Brian
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